Mega Financial eyes Chang Hwa stake

Mega Financial Holding Co (兆豐金控) announced yesterday that it is planning to bid for a stake in Chang Hwa Commercial Bank Ltd (彰化銀行).

"To help expand the financial group's business scope as well as to enhance the banking units' business scale and market share, [we] plan to join the bid to buy 1.4 billion preferred shares in Chang Hwa," Mega Financial said in a statement to the Taiwan Stock Exchange.

Currently, there are two banking arms under Mega Financial -- International Commercial Bank of China (中國商銀) and Chiao Tung Bank (交通銀行).

By acquiring Chang Hwa, Mega Financial's market share, measured in terms of bank loans, would rise to 12 percent from 7.2 percent currently, Joseph Shieh (謝劍平), Mega Financial's executive vice president, told Dow Jones Newswire yesterday.

Buying the 1.4 billion new shares, representing a stake of 22 percent in the sixth-largest Taiwanese bank by assets, will cost a bidder at least NT$25.17 billion (US$786.6 million) based on the offering's floor price of NT$17.98 a share which Chang Hwa's board set on June 24.

Mega Financial, the nation's second-largest financial service provider by assets, said it would have to pay for the stake between Sept. 26 and Sept. 28 should it win the bid.

The company plans to use its own capital to buy the Chang Hwa stake.